7 Tips for A More Efficient Bank Reconciliation

1. 7 Tips for A More Efficient Bank Reconciliation

2. A bank reconciliation is a comparison made between the accounting records that a company has regarding its bank accounts and the modifications made to those accounts by the bank itself. It is a necessary process that companies must undertake, but it can be excessively long and tedious. Here are some tips and tricks to help you save time on this process and make it more efficient.

3. 1. Information and documentation • First of all, it is essential to have all the necessary information and documentation at hand. As with a jigsaw, if you want to detect which parts are missing, which are wrong, or which are in the wrong place, you need as many parts available as possible; that way, you can get a better overview. In addition, if some of the information has not been recorded before starting the process, you will have to make several attempts to complete it, which increases the time required. • Therefore, if necessary, you should claim the documentation from the right people. For example, some receipts for vendors' travel expenses may be missing and will need to be found and recorded.

4. 2. Don't forget the box • The boxes are also part of the finances of the company, so if they are not taken into account, the bank reconciliation will be much more difficult. It is a good idea to perform a periodic triple reconciliation using actual cash, a carrying balance, and the book balance. That way, you can reduce the chance of errors.

5. 3. Reconcile in sections • It's a good idea to start your bank reconciliation by checking the closing balance from the previous month and, if necessary, even further back. This is useful in case a transaction was posted on a date before the previous count was reached. This way, if an error is found, it will not be necessary to review everything, article by article; instead, we can refer to the sections to find out in which month the discrepancy occurs.

6. 4. Analyze discrepancies • Very often, a problem with the bank reconciliation is the result of "typical" errors, such as: • Make an entry twice, resulting in a discrepancy equal to the amount of the entry in question. • Do not post a transaction, which will also produce a discrepancy equal to the amount of the missed entry • Making a mistake when entering a comma, resulting in a discrepancy where the digits add up to 9. For example, if instead of entering $ 12.40, we enter $ 124.0, the discrepancy will be $ 111.60. When you add the digits: 1 + 1 + 1 + 6 = 9 • Entering a number with the digits in the wrong order. This also leads to a discrepancy in which the digits add up to 9. For example, if instead of $ 974, we put $ 947, the difference is $ 27, and if we add these figures: 2 + 7 = 9 • Before wasting time going through the accounts item by item, you can try to identify the source of the discrepancy by taking this type of error into account, paying close attention to the amount in question and checking whether it can be linked to an amount in another transaction. This will save you a lot of time and a lot of headaches.

7. 5. Banks also make mistakes • While not common, at least the bank may have made a mistake. They can debit an incorrect amount from our account, or deposit a payment that is not due; If we have several different accounts with the same bank, these accounts may be confused when making a deduction or a deposit, etc. For this reason, if you identify an error for which an explanation cannot be found or for which you have doubts, consult your bank.

8. 6. Reconciliation of items, last resort • Leaving the discrepancy as a conciliatory element and forgetting it seems a very easy and tempting solution. But the discrepancy will still be there, so this is not a genuine solution. If they accumulate in excess, the bank transaction reconciliation platform will cease to make sense, the accounts will not reflect reality, and the resulting mess will be increasingly difficult to resolve. • We must ask for account balances that we have not received, invoices and receipts that have not arrived so that we can be sure, as mentioned in the first section, that we have all the information and documentation we need, and that the books are up to date. till the date.

9. 7. Automate the process • As you may already know, any administration on paper will always take longer and be more error prone than the same task performed automatically. The same applies to the bank’s best reconciliation platform & reconciliation process. There are tools to automate this process, or part of it, to make it more efficient and controllable.

10. About Us • CAMS is a technology driven financial infrastructure and services provider to Mutual Funds and other financial institutions for over two decades. As the market leading Registrar and Transfer Agency to the Indian Mutual Fund industry, CAMS serves ~70% of the average assets under management – as of August 2021. We also provide technology enabled service solutions to Alternative Investment Funds and Insurance Companies. Besides serving as a B2B service partner, CAMS also serves customers through a variety of touch points such as pan-India network of service centres, white label call centre, online, mobile app and chatbot. • Website - https://www.camsonline.com/Business/Reconciliations-Recondynamix